The International Monetary Fund’s latest World Economic Outlook makes for gloomy reading. Growth projections have been revised downward almost everywhere, especially in Europe and the big emerging markets such as China. And yet, when looking out over the next four years — the next presidential term — the IMF projects that the United States will be the strongest of the world’s rich economies. U.S. growth is forecast to average 3 percent, much stronger than that of Germany or France (1.2 percent) or even Canada (2.3 percent). Increasingly, the evidence suggests that the United States has come out of the financial crisis of 2008 in better shape than its peers — because of the actions of its government.

Perhaps the most important cause of America’s relative health is the Federal Reserve. Ben Bernanke understood the depths of the problem early and responded energetically and creatively. The clearest vindication of his actions has been that the European Central Bank, after charting the opposite course for three years with disastrous results, has adopted policies similar to the Fed’s — and averted a potential Lehman-like collapse in Europe. (Mitt Romney’s two most prominent academic advisers, Glenn Hubbard and Gregory Mankiw, seem to recognize this, but Romney apparently doesn’t. As recently as August the Republican presidential nominee repeated his criticisms of the Fed and promised to replace Bernanke at its helm.)

In addition to providing general liquidity, the Fed and the Treasury rescued the financial system but also forced it, through stress tests and new rules, to reform. The result is that U.S. banks are in much better shape than their European counterparts. Consumers have also been paying off debt, thanks to a series of tax cuts and other forms of relief.

A McKinsey & Co. study of crises in recent decades found that the United States is mirroring the pattern of countries with the strongest recoveries. It noted that “Debt in the financial sector relative to GDP has fallen back to levels last seen in 2000, before the credit bubble. US households have reduced their debt relative to disposable income by 15 percentage points, more than in any other country; at this rate, they could reach sustainable debt levels in two years or so.”

Kenneth Rogoff and Carmen Reinhart, the leading experts on financial crises, argue that the United States is performing better than most countries in similar circumstances. U.S. consumer confidence is at its highest levels since September 2007.

Every recovery since World War II has been led by housing, except this one. But finally, housing is back. Two weeks ago, Jamie Dimon, the chief executive of JPMorgan Chase, declared that housing had turned the corner and predicted that, as a consequence, economic growth in 2013 would be so strong the Fed would have to raise interest rates. Given his firm’s vast mortgage portfolio, Dimon has a unique perspective on housing, and he is a smart man who knows that the Fed has promised to keep rates flat for three years. Last week, data on new housing starts confirmed Dimon’s optimism.

"And if we held YOU to the same standards as you hold Fareed, you would have been shunned and ostracized here long ago for plagiarism... " ~~~~~~~~~~~~

If you copy and repeat facts without attributing them, it's plagiarism If you copy and repeat falsehoods, you're Fox News material.

Hendersonville NC

Username hidden
(2984 posts)

User Details are only visible to members.

Maybe we'll actually have a real capitalist economy after the fall? One where businesses rise or fall on their own merit, and don't have their hands out to the government for equipment, tax breaks and subsidized labor.... Nahhh.

Hazle Township PA

Username hidden
(7989 posts)

User Details are only visible to members.

Back to the OP. I wonder why Zakaria barely mentioned the biggest stumbling block in the way of sustaining or improving on this already-weak recovery.

Every decent projection I've seen is that the looming fiscal cliff would plunge us back into recession. Private analyses, Simpson-Bowles, and a particularly chilling CBO report two months ago paint a pretty grim picture of what would happen if abrupt spending cuts and expiration of certain tax cuts kicked in.

Belle Chasse LA

Username hidden
(11299 posts)

User Details are only visible to members.

" High quality stuff, especially from the St. Louis Fed. "

I've focused mostly on the NY Fed (for obvious reasons) but I've heard the St. Louis Fed has some very good things about it.

I didn't take offense, just lack of sleep.

East Fishkill NY

Username hidden
(3613 posts)

User Details are only visible to members.

Sometimes my sarcasm is too subtle and people take offense where none was intended.

Belle Chasse LA

Username hidden
(11299 posts)

User Details are only visible to members.

Wiki was the fastest place to find this and I knew it was true anyway...

Condemn me for being lazy on a Sunday.

East Fishkill NY

Username hidden
(3613 posts)

User Details are only visible to members.

I get all my info from Wiki.

But seriously, I've read hundreds of research reports by the Fed over several decades. High quality stuff, especially from the St. Louis Fed.

Belle Chasse LA

Username hidden
(11299 posts)

User Details are only visible to members.

Oh dear!

Username hidden
(17355 posts)

User Details are only visible to members.

lol

Actually I'm impressed I can teach you much in this realm. You seem to have some pretty deep chops.

insider chops?

East Fishkill NY

Username hidden
(3613 posts)

User Details are only visible to members.

Well, I just learned something new. Thanks. Technically, that statute refers to the Open Market Committee and not the Fed itself, but that's largely a distinction without much of a difference.